GM fears overshadow China Stimulus Plan
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) started the week extremely well offered as world markets absorbed news released over the weekend that China was implementing a US$585bn stimulus plan to help growth remain at elevated levels in the world’s most populous nation. The goodwill generated couldn’t be sustained into the US session as news of Circuit City’s bankruptcy and large falls in GM and Google sent US stocks spiraling lower. In the U.S. share markets, the NASDAQ was down 30 points (-1.86%) and the Dow Jones was down 73 points (-0.82%). Crude Oil closed up $1.37 ending the New York session at $62.41 per barrel. Looking ahead, November Economic Sentiment previously at 41.1.
European Euro
The Euro (EUR) gained on surging Oil in Asia and improved risk sentiment. The gains into 1.29’s were very limited and as US stocks reversed direction the Euro fell heavily to 1.27 supports. November Sentix fell -36.4 vs. -34 forecast. Overall the EUR/USD traded with a low of 1.2721 and a high of 1.2926 before closing the day at 1.2760 in the New York session. Looking ahead, German September Trade Balance expected at -8Bn vs. -8.2Bn previously. Also released the November German Zew Economic Survey expected at -62 vs. -63 previously
Japanese Yen (JPY)
The Japanese Yen (JPY) was moved by equities and initially sold across the board as crosses surged higher on the China news. USD/JPY stalled in the mid 99’s hurting the overall technical picture as the pair once again failed to get past the key 100 level. As US stocks felt the weight of GM the USD fell quickly and the JPY gained. Overall the USDJPY traded with a low of 97.63 and a high of 99.47 before closing the day around 98.00 in the New York session.
Pound Sterling (GBP)
The Sterling (GBP) tracked the Euro but was first to fail on the topside as economic data from England shows a slump in PPI numbers. October PPI slumped -5.6% vs. -2.6%. This large drop in inflation pressure should allow further cuts form the Bank of England and further undermines the Pound. Overall the GDP/USD traded with a low of 1.5578 and a high of 1.5883 before closing the day at 1.5660 in the New York session. Looking ahead, October BRC Retail Sale previously -1.5%.
Australian Dollar (AUD)
The Australian Dollar (AUD) was one of the major gainers on China news as demand for Australia’s resources are expected to remain strong. Large gains in Metals and stocks also helped to underpin. Moderating the mood was a lowering of the growth outlook from the RBA and a drop in home financing. The mood darkened in the US as markets absorbed the dire GM and Google news. Overall the AUD/USD traded with a low of 0.6653 and a high of 0.6984 before closing the US session at 0.6726.
Gold
Gold (XAU) took advantage of the large gains in Oil to jump above resistance at $750 but was unable to make further gains as US couldn’t hold equity gains. Overall trading with a low of USD$738.8 and high of USD$767.8 before ending the New York session at USD$745 an ounce.
Technical Analysis: China Stimulus Plan
Euro (EUR)
Euro – 1.2760 : Initial support at 1.2710 (Nov 10 low) followed by 1.2652 (Nov 7 low). Initial resistance is now located at 1.2956 (Nov 6 High) at followed by 1.3116 (76.4% retrace 1.3298 to 1.2526)
Yen (JPY)
Yen – 97.95 : Initial support is located at 97.61 (Nov 10 low) followed by 96.36 (Oct 31 low). Initial resistance is now at 99.92 (Nov 5 high) followed by 100.57 (Oct 22 high).
Pound Sterling (GBP)
Pound – 1.5640 : Initial support at 1.5537 (Nov 7 low) followed by 1.5402 (Oct 28 low). Initial resistance is now at 1.5885 (Nov 10) followed by 1.6197 (Nov 5).
Australian Dollar (AUD)
Australian Dollar – 0.6725 : Initial support at 0.6652 (Nov 10 low) followed by the 0.6546 (Nov 7 low). Initial resistance is now at 0.7015 (Nov 4 high) followed by 0.7065 (Oct 20 high).
Gold (XAU)
Gold – 744 : Initial support at 718 (61.8% retrace 777.90-682.41) followed by 707 (Oct 27 low). Initial resistance is now at 777.5 (Oct 30 high) followed by 803.65 (Oct 21 Level).
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